The days of growing older quietly and predictably are well and truly over. Nowadays we’re divorcing and remarrying in our 40s, becoming carers to our parents in our 50s, taking the childcare reins in our 60s, and then caring for our partners in our 70s and 80s.
None of these things are cheap. A divorce later in life can horribly derail your finances with little time to put things right. Meanwhile, having to give up work to care for a family member can throw all your careful retirement plans into disarray. And needing to pay for expensive care can quickly erode everything you’ve worked for.
If we’re going to stay afloat during an incredibly expensive time in life, we need to have built enough of a savings buffer to protect ourselves – with an emergency savings safety net, robust retirement savings, and a pot of money for care.
Unfortunately, we’re also reaching financial stability later in life, so in many cases there’s only the briefest of pauses between climbing the mountains of early adulthood, and slipping down the slopes of older age. It means we can’t afford to wait for the ideal moment before we start squirrelling money away for the future. We need to do as much as we can afford, as soon as we can afford to do it.
It’s not all doom and gloom as we get older though. When we hit our 60s and early 70s we’re less likely to be trapped in unhappy marriages, we get to experience the joy of hands-on grandparenting, we’re less likely to be bored by a dull and predictable retirement, and we’re happier than at any other time in life.”
7 steps to save for build a plan B
- Look at where you can cut back on spending and free up a lump sum each month for the future.
- Pay off your expensive debts first, and draw up a budget so you keep this kind of borrowing to a bare minimum from now on.
- Build an emergency cash savings safety net in a competitive easy access account. You should ideally have 3-6 months’ of expenses in this account.
- Don’t be put off by how far you have to go. Building savings for the future can seem overwhelming, but the key is to do whatever you can right now.
- Automatically increase it each year: One option is to make it a percentage of your salary, so it rises as your wages do and you don’t notice the extra.
- Use a pension calculator. Take stock of where you are every year, and consider whether you can afford to pay more into your pension.
- See what help you can get. If you’re paying into a workplace pension, your employer may agree to match any extra you pay in. If you’re struggling to keep your retirement savings up while you take time off for caring responsibilities, talk to your partner about what you can do together. Even non-earners have a £3,600-a-year tax-free pension allowance.
The milestone statistics
- Women have their second child at the age of 31 – on average.
- The average age of first time mums is 29, so the gap between children has narrowed from two-and-a-half to two years.
- Fertility rates for women aged 40 and over have almost doubled since 1999.
- Women are increasingly likely to stop at two children. Only a quarter have three or more (30% for women born 20 years earlier).
- Earnings peak at the age of 41 – at £14.83 per hour.
- This is down from 47 ten years ago (this doesn’t mean wages fall from this age but the higher paid may retire).
- Women’s wages continue to peak at earlier ages than men (41 rather than 44), but the gap has narrowed.
- Women’s wages also peak lower – at £13.68 an hour, while men’s wages peak at £16.40 an hour.
- Marriages are lasting longer before divorce – at an average of 12.5 years.
- 12% of people provide informal care for their loved ones.
- 40% of female carers and 38% of male careers are helping their mother or father (or both).
- Men are more likely to care for their partners – one in four men compared with one in six women.